What $9 Natural Gas Means for the Haynesville Land/Mineral Owner--My Top 10

1.  Most new wells will be 7500'-10000'K CUL's drilled to within the known boundaries of the HA and BO Shales.  Some shorter laterals may be drilled due to offset operator ownership or previous legacy wells. 

2.  Land/Mineral Owners need to educate themselves on the drilling and completion of these wells as the pay deck is based on allocation by perforated foot.  Sections share the production based on this allocation. 

3.  Many of these wells are drilled from surfaces in other sections before the lateral is begun so the permitting process can be confusing--download the location plat to see the actual path of the wellbore.  Just because the surface is in Section 32 does not mean that Section 32 will share in the wells production. 

4.  With this in mind, many landowners can receive additional bonuses from subsurface easements and well pad rentals that may be out of the unit being drilled.  

5.  New pipelines are being laid all across the Haynesville--if you allow a pipeline under your property keep in mind that this document is just as important as a lease agreement and use professional representation if needed. 

6.  Many operators are allowing the more active operator in the section to drill in a shared section so it may not be "your" operator that actually drills the well.  Pay attention.

7.  Learn to navigate Sonris for LA land/mineral owners.  It is free and has most all of the information you need. I have no advice for the Texas side--my attempts at the RRC website have not been good. 

8.  The decline of the new, properly drilled and completed, CUL's in the core are vastly different than the original legacy single section laterals.  Make sure you are educated to these volumes.  Not all operators drill and complete the same kind of wells.  The type of completion will make a difference in the EUR (estimated ultimate recovery). 

9  Monitor old legacy wells for production.  If an operator sees a well approaching an economic limit they may do a re frac to boost production and delay CUL's.  

10.  Enjoy this period of good natural gas prices and thank God you don't live in Europe this winter.  Due to a myriad of mis- steps (some natural, some political, some environmental) there is a chance Germany el al runs out of NG this winter.  

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Replies to This Discussion

Permalink Reply by Mister Sunday on August 16, 2022 at 8:00

I actually fear for the Europeans this winter.

Permalink Reply by d laurenson on August 17, 2022 at 6:50

Can someone explain the difference in decline rate?

Permalink Reply by Ryan Howrish on August 17, 2022 at 10:30

There are several factors that impact the early-time (first year) decline rate.  As ShaleGeo mentioned, the completion designs are far more intense in recent years relative to wells completed in the 2009-2013 period.  The combination of longer laterals, tighter cluster/stage spacing, higher proppant loading, and significantly increased fluid loading has increased the early-time productivity of new wells. 

One often overlooked factor is the different operating philosophies of the different operators.  Without flowing pressure data this is difficult evaluate, however the shape of the decline curve provides some information.  Some operators intentionally restrict early-time flow to a certain rate or pressure drop fearing that the wells will be damaged if they are flowed too hard.  These wells generally have a lower decline rate until the surface pressures approach the gathering system pressure.  Other operators are more aggressive early in the life of wells which yield higher initial rates but also higher decline rates once the well is unable to maintain the high initial rate.  The gathering system or wellsite facility capacity can also impact the gas rate.

In a $9+ gas price environment I would prefer higher rates today knowing that also brings higher decline rates.

Permalink Reply by Skip Peel - Mineral Consultant on August 17, 2022 at 10:38

Good points, Ryan.  Thanks.  I'll add that in addition to a lack of pressure data, we also only have sporadic choke setting data on SONRIS.  There is an initial production flow test and then a test approximately every six months or more thereafter.  An early flow test can be deceiving for long lateral wells that can take weeks to clean up and reach maximum flow.

Permalink Reply by Skip Peel - Mineral Consultant on August 17, 2022 at 12:54

It is likely accurate for that one test on that one day according to the head of the Shreveport District of OOC.  In between tests, who knows?

Permalink Reply by Ryan Howrish on August 17, 2022 at 13:08

I was typing a very similar response Skip.  The reported test data is for a snapshot in time.  On its own, the data is not that useful.  The trend in the changes in rate/volume per unit drawdown is more valuable to understanding well performance than a single rate or choke size data point. 

Permalink Reply by MB on March 16, 2023 at 8:28

I've received six phone calls in the past 4 weeks regarding a mineral sale for Section 36, just outside of Mansfield.  Two of the calls were today.  It certainly seems like something's brewing for a drill in the section.  Do you or anyone associated with Rumor Control have any thoughts?  Thanks, Brent

Permalink Reply by Skip Peel - Mineral Consultant on March 16, 2023 at 8:34

Brent, what section-township-range?

Permalink Reply by Skip Peel - Mineral Consultant on March 16, 2023 at 13:05

I get a lot of contacts from members with similar questions like, why am I getting offers now?  Something must be happening!  The answer can be public record indications of an operator looking to drill new wells.  However, as often as not, it's just that many investors are looking to acquire mineral rights prospective for the Haynesville Shale (often rights that also have proven Bossier Shale reserves) and there is no public record indication of new wells in the offing.  There doesn't need to be "something going on" to get offers to buy your mineral rights.  Offers are going out by the hundreds every week for every portion of the proven Haynesville Shale fairway.  And even some for portions that are unproven.  And even by some mineral companies that obviously don't know what they are doing.  At lot of buyers from other states are somewhat clueless about LA mineral laws and where the Haynesville is proven and where it is not.  Sellers beware.

Permalink Reply by MB on March 20, 2023 at 5:38

Thanks for the amplification.  Good info.

Permalink Reply by Steve P on March 17, 2023 at 8:05

maybe 35-12n-13w.  CHK is drilling wells in 25/36.

Permalink Reply by Skip Peel - Mineral Consultant on March 17, 2023 at 8:21

Could be.  Every township has a Section 36.  Take your pick.

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